Video game industry sales finally take a hit

Industry still performing better than most, but in March, for the first time in the recession, its year-over-year revenues dropped.

March revenues for the video game industry dropped 17 percent from a year ago, the NPD Group reported Thursday, the first time in the current recession that the business has seen sales fall.

For the month, the analyst firm reported that the industry turned in total sales of $1.43 billion, down 17 percent from $1.72 billion a year earlier. Hardware sales were down 18 percent, while software was down 17 percent.

But while the numbers look poor, NPD analyst Anita Frazier said she attributed some of the drop to the vagaries of the calendar.

"While it might be tempting to jump to the conclusion that the sky is starting to fall on the video games industry given this month's results, it's important to remember that two very big things are different this year than last," Frazier wrote in a note accompanying NPD's report. "First, Easter fell in March last year whereas it fell in April this year, and last March included the release of Super Small Bros.: Brawl, which went on to become the fourth best-selling game in 2008."

Perhaps, but one game's fortunes are unlikely to be enough to turn around an entire industry, especially given that hardware sales dropped about the same as overall revenues.

Overall sales were also down 2.7 percent from February's $1.47 billion, and each of the six hardware platforms NPD tracks--Sony's PlayStation 3, PS2 and PSP, Microsoft's Xbox 360 and Nintendo's Wii and DS--had lower sales in March than in February . The PS3 and Wii led the drops, with 21.0 percent and 20.2 percent lower sales, respectively.

By comparison, the Xbox saw its sales fall between February and March, but less than the PS3 and Wii, and Frazier reported that Microsoft's console was the only one with good year-over-year news.

"While it's not unusual for March hardware sales to be lower than February," Frazier wrote, "I thought we'd see higher unit sales on most platforms. The Xbox 360 was the only platform to achieve a year-over-year sales increase."

Frazier also said Nintendo's numbers were noteworthy, given the effect of Super Smash Bros.: Brawl on the company's March 2008 sales.

"Wii and NDS hardware sales remained brisk, taking the top two spots for (March 2009) in hardware unit sales," she wrote. 'It's important to keep in mind that the (game's) effect from last year impacted hardware sales as well, so while the year-over-year comps are down for the Wii, the sales are still impressive."

Still, the Wii--the darling of the video game industry media since its surprise success became almost institutionalized--has seen some negative press recently.

In March, for the first time, the PS3 outsold the Wii in Japan, and many observers wondered if that milestone indicated that Nintendo's console's dominance had finally come to an end.

 

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